How does the funding model work?

There have been many reports, papers and policy notes describing the intricate details of how the levy works. But, put simply, the apprenticeship levy scheme works like this:

  1. You create an employer account with the Apprenticeship Service
  2. You pay a levy equal to 0.5% of your payroll, monthly to HMRC
  3. Government adds 10% to the amount you pay each month (known as the ‘top-up’)
  4. Your Apprenticeship Service account accumulates monthly credits (2+3 above)
  5. You plan an apprenticeship scheme (NSAN can help you with this)
  6. Choose your apprenticeship standards or frameworks
  7. You contract with an approved training provider registered on the ROATP to deliver your apprenticeship training.  Each standard has an allocated funding band, so when you contract with your training provider you agree a price for the delivery in line with the funding bands.
  8. Your chosen lead provider delivers your apprenticeship training and registers your apprentices with the Education and Skills Funding Agency (ESFA)
  9. you pay the provider digitally for their services via the Apprenticeship Service account
  10. Levy funding continues to accrue monthly and is accessible through your account for a period of up to 24 months.  An unused funds after this time will be removed from your digital account.

There are a couple of other things that companies need to know:

  • If you use up your levy, or have insufficient funds in your Apprenticeship Service account to cover the costs of your training (because you have more apprentices than your levy will fund) the Government steps in and co-funds the additional apprentices.
  • Co-funding is where the Government pays 90% of the agreed training costs and you, as the employer, only pay 10% (that’s 10% of the agreed funding band for the specific apprenticeship being delivered)
  • If you are not a levied employer because your payroll is less than £3m annually then all of your apprentices are co-funded from day one
  • From April 2018, levy paying employers are able to transfer funds to another employer through the Apprenticeship Service.  Transfers can be made to any employer including smaller employers in your supply chain and apprenticeship training services.  Levy paying employers will initially be able to transfer up to 10% of the annual value of the funds entering their Apprenticeship Service account. 

If you would like us to talk you through the process or get more please contact your Operations Manager.  If you are not a member, contact us to find out more about the benefits membership could bring to your organisation.